PE1102/F WRITTEN SUBMISSION FROM FALKIRK COUNCIL – PETITION PE1102 1. Background 1.1 Falkirk Council, like many local authorities, is strongly opposed to the closure of post offices in the Falkirk Council area. The Council recognises the important social function that post offices have, and that for many individuals in our communities, the post office functions as the main village or local shop. These facilities are used largely by elderly people, people with young children and those with mobility problems to purchase essential items. 1.2 The Council has for a number of years used post offices to provide services such as rent collection etc. Since 1979, Falkirk Council has supported the local area Post Office Network through the facility for tenants to make payment of rent at post offices. This was extended to include council tax payments in 1996. Our contract is with the Alliance & Leicester. Payments are made through a service known as 'BillPay'. Payments are made using plastic payment cards issued by Falkirk Council which can be used to pay rent and/or council tax at the Council's One-Stop-Shops and any post office in the UK. This method of payment is 1 of 7 options that are available to our customers. 1.3 As a result of the development of more efficient and convenient methods of payment, e.g. by Direct Debit, via the Web and by telephone, and the reduction in the Council's housing stock through the right to buy, the number of payment transactions made at post offices has reduced year on year over the past 10 to 15 years. In the early 1990's more than 100,000 rent payments were made through the local post office network. This reduced to 56,000 by 2003/04, with further reductions to just under 39,000 transactions in 2006/07. Over the last 4 years the number of Council Tax payments made at post offices has reduced from 99,000 in 2003/04 to 78,000 in 2006/07. 1.4 Falkirk Council also supports rural post offices through topping up the award of 50% mandatory rates relief with discretionary relief. This is subject to certain restrictions relating to the definition of a rural area, the rateable value of the post office and certain other conditions. At present we are awarding discretionary relief to 2 post offices. However, we are also awarding the same relief to 5 subjects described as general stores that may also be sub-post offices. The rateable value for upper threshold for subjects such as post offices is now £7,500 following the latest revaluation that was effective from 1 April 2006. 2. Network change Programme 2.1 Under the Network Change Programme the UK government is committed to the closure of 2,500 post offices throughout the UK. As part of this process, Scotland has been divided into 6 areas based on the Westminster constituencies; an action plan will be developed for each of the 6 areas. The proposals for Falkirk Council are in two areas, as our Westminster constituencies are not coterminous with the local authority boundaries. Postwatch estimated that if there is an even distribution of closure across the UK, 17.5% of post offices will close in every area. Using this information the Council anticipated that in the constituency of Falkirk, 5 post offices might close and 3 might close in the constituency of Linlithgow and Falkirk East. 2.2 In August 2007, Post Office Ltd wrote to the Council to ask for development plans and socio-economic data on the area to inform the decision making process. The Council complied with this request. The details of the first phase of closures in the Falkirk constituency were announced in October 2007 and 7 post offices were nominated for closure. This is obviously 2 more than anticipated. PE1102/F 2.3 Following the publication of the Area Plan by Post Office Ltd, we undertook a number of steps in preparing the Council’s response: • Post Office Ltd’s proposals were placed on the Council’s website; • A letter was written to Community Councils in the communities affected asking them to make a response; • Detailed analysis of each area was carried out and an assessment made on the potential impact on each community; and • The Council wrote to each of the affected postmasters asking them for their views. 2.4 The Council’s detailed response to Post Office Ltd is included as Appendix I. At the end of the consultation period, there was no change to Post Office Ltd’s proposals and all 7 post offices have now closed. 3. The Essex Approach 3.1 Essex County Council announced in March that they were planning to run post offices. Falkirk Council approached Essex County Council to establish if the approach within Essex could be replicated within the Falkirk Council Area. It was quickly established that the situation in Essex was slightly different to Falkirk, in that the post offices in Essex had not yet closed. 3.2 A number of principles were established by Essex County Council and the Post Office Ltd, the most important of which is that Post Office Ltd has agreed to work with Councils regarding retaining post office services. In addition to this, Post Office Ltd agreed to provide commercial information in relation to specific named post offices to Essex. 3.3 Initial discussions between Essex County Council and Post Office Ltd focused on the desirability of keeping short listed post offices open until a deal could be negotiated. However, following high level correspondence with the Minister and the Managing Director of Post Office Ltd, an agreement was reached that those post offices due to close but which were then still open, could be given the opportunity of continuing for a further two months. With regards those that had already closed, equipment would not be moved out of premises for two months. 3.4 Essex were given, after signing a disclosure form, some basic financial information about each of a sub-set of the shortlist was provided. Essex County Council has described the level of financial information on each post office as extremely limited. Additionally, the information they have received from sub-postmasters on the operation of the post office was also described as extremely limited. In most cases it consists of the following: Total Budget, Float, Annual Subsidy, and Training budget. 3.5 In the negotiations between Essex County Council and Post Office Ltd, Post Office Ltd have asked for certain of the shortlist post offices to be excluded on the basis that continuing operation of these would jeopardise the viability of neighbouring offices that were planned to remain open. Furthermore, Post Office Ltd would not accept the re- instatement of a full-time office to replace an outreach service. Within Essex, several possible models are being discussed in confidence and meetings are continuing to examine details and formulate a rescue package. Many of the issues identified above have yet to be resolved, in particular the fact that Post Office Ltd want to exclude certain offices on the basis that continued operation will jeopardise the viability of neighbouring offices. PE1102/F 3.6 Essex County Council recognised that the future provision of services will not be exactly the same as before and are considering whether other community buildings, e.g. libraries or public houses, would be suitable for the provision of services and would strengthen their viability. In the longer term, Essex County Council sub-post offices will need to become viable without relying on continuing high levels of funding. This will require a thorough analysis of opportunities, including using them as agencies/outlets for public sector services. 3.7 Falkirk Council understands that Essex County Council is to take an operating licence from the Royal Mail Group and effectively run post offices as a franchise. The terms of the licence would need to be examined to understand any potential risks that would lie with the Council. Any risk would be established after examining the detail of the contract on offer. Essex County Council has not seen a copy of the contract, although they have repeatedly requested this. They are looking to employ a business consultant to work with the Council and the sub-postmasters, to work out the final details of their approach. 3.8 Essex County Council has raised a number of issues it would advise other Councils to consider. This includes: • Reviewing how State Aid rules will apply to the Council subsidising services; • Make sure that there is real community support for retention and thus potential viability; • Make sure that the sub-postmaster really wishes to continue the business; • Be prepared to use high level political influence to unblock sticking points; • Post Office Ltd. is seeking commitment to March 2011 in order to tie in with the Government commitment to support the network to that date; • Sub-post offices close for other reasons (e.g. retirement). Will the Council be expected to support these, having set a precedent? and • In addition to any financial support for post offices, there will be staffing implications within your authority to manage the relationship. 4. Falkirk Experience 4.1 The Leader of the Council and Council officials recently met with Post Office Ltd. At this meeting Post Office Ltd confirmed a great deal of the information that has previously been provided to us by Essex County Council including: • Post Office Ltd will expect certain post offices to be excluded on the basis that their continuing operation would jeopardise the viability of neighbouring offices; and • Post Office Ltd will not allow post offices to remain open while negotiations are continuing and all equipment will be removed.